HICKMAN AND ORS v TURNER AND WAVERLEY LIMITED SC 46/2011

HICKMAN AND ORS v TURNER AND WAVERLEY LIMITED SC 46/2011

Blue Chip's JVA, PIP and PAC products were debt securities offered to the public without compliance with the Securities Act and not saved by s5(1)(b); subscriptions included entry into the SPAs so s37(4) renders SPAs unenforceable where executed at the same time as or after the relevant Blue Chip product agreements; developers are properly characterised as issuers (or are attributable with Blue Chip's conduct) so s37(5) applies to require repayment; timing issues for SPAs executed earlier are remitted to the High Court.

Citation
HICKMAN AND ORS v TURNER AND WAVERLEY LIMITED SC 46/2011
Parties
First Appellant: Neil Tony Hickman and ors; Second Appellant: David John Lester and ors; Third Appellant: Anthony Collingwood and ors; Fourth Appellant: Norman and Marie Herrick; First Respondent: Turner and Waverley Limited; Second Respondent: Greenstone Barclay Trustees Limited; Third Respondent: Grafton Projects Limited
Court
Supreme Court
Jurisdiction
New Zealand
Judgment Date
9 August 2012
Procedural Posture
Civil Appeal / Supreme Court Judgment
Outcome
Appeals allowed
Legal Topics
Debt Security, Offer to the Public, Void Irregular Allotments (s37), Unenforceability of Contracts, Agency and Attribution of Knowledge, Tainting Doctrine, Statutory Relief Under S37
Securities Law Contract Law Company Law Debt Security Offer to the Public Void Irregular Allotments (s37) Unenforceability of Contracts Agency and Attribution of Knowledge +2 more

Case Brief

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Parties

Neil Tony Hickman and ors

First Appellant

David John Lester and ors

Second Appellant

Anthony Collingwood and ors

Third Appellant

Norman and Marie Herrick

Fourth Appellant

Turner and Waverley Limited

First Respondent

Greenstone Barclay Trustees Limited

Second Respondent

Grafton Projects Limited

Third Respondent

Procedural Posture

Civil Appeal / Supreme Court Judgment

Legal Issues

  1. 1 Whether Blue Chip's JVA, PIP and PAC products were 'securities' and specifically 'debt securities' under the Securities Act 1978
  2. 2 Whether Blue Chip was an 'issuer' for the purposes of the Act and whether developers were issuers
  3. 3 Whether s5(1)(b) exemption for interests in land excluded the products/SPAs from regulation

Ratio Decidendi

Blue Chip's JVA, PIP and PAC products were debt securities offered to the public without compliance with the Securities Act and not saved by s5(1)(b); subscriptions included entry into the SPAs so s37(4) renders SPAs unenforceable where executed at the same time as or after the relevant Blue Chip product agreements; developers are properly characterised as issuers (or are attributable with Blue Chip's conduct) so s37(5) applies to require repayment; timing issues for SPAs executed earlier are remitted to the High Court.

Court Disposition

Appeals allowed

Orders

  • The SPAs executed at the same time as, or after, the corresponding Blue Chip investment product agreements were entered into are declared to be unenforceable under s37 of the Securities Act 1978
  • The High Court is to determine whether SPAs entered into before the corresponding Blue Chip investment products were executed were subscriptions for securities